Sunday, 6 September 2009

The 3 o'clock lunch break

Here is a cracking article from the New York Times. It offers a scathing account of how Mr. Madoff fooled the SEC, who were supposed to be regulating his ponzi scheme.

I particularly liked the idea of a three o'clock lunch break.

Unseasoned investigators from the Securities and Exchange Commission were alternately intimidated and enthralled by a name-dropping, yarn-spinning Bernard L. Madoff as he dodged questions about his financial house of cards, according to a scathing new report on the agency’s repeated failure to uncover the huge investment fraud.

When one of Mr. Madoff’s employees was talking to investigators in 2005, an aide to Mr. Madoff broke up the conversation, explaining that it was time for lunch — at 3 in the afternoon.

4 comments:

And another fascinating bit from that article: From 1992 until the Madoff empire imploded, one inquiry after another went nowhere, the inspector general said. Some investigators “weren’t familiar with securities laws,” and some seemingly refused to believe their own ears even when Mr. Madoff contradicted himself or offered illogical answers to questions.

They weren't familiar with securities laws? Wouldn't their job descriptions include familiarity with securities laws? What, exactly, were their jobs if not enforcing securities laws?

Madoff seemed to be certain he would never be caught, because he knew the people at the SEC were not competent.

Only the implosion of the market itself finally unearthed the scheme, and he turned himself in.

When the FBI arrived, his statement was: There is no innocent explanation.